Trade Agreement Between India And Vietnam
Vietnam offers several lucrative reasons for investing, such as improved market access, favourable investment policy, free trade agreements, economic growth, political stability, low labour costs and young labour. Vietnamese exports to India have the potential to grow by 10 per cent per year, or about $633 million, according to a Standard Chartered trade opportunity report. Expected growth is mainly focused on goods exports (53%) services (46%). Both countries were striving to increase bilateral trade to $15 billion by 2020, but trade-related disruptions in COVID-19 led to a 9.9 percent decline in trade to $12.3 billion in the last fiscal year. Vietnam has established itself as India`s 18th largest trading partner, ranking seventh among Vietnam`s major trading partners. The free trade agreement was ratified on June 8 and will ensure duty-free trade for 99 percent of the goods, as reported by Reuters. The free trade pact signed between Vietnam, the emerging leader of Southeast Asia, and Belgium`s 27-member customs bloc, the European Union (EU), does not bode well for India, exporters and trade experts told CNBC-TV18. Institutional mechanisms for bilateral trade There are several bilateral mechanisms at different levels between India and Vietnam. The meeting of the Joint Commission at the level of foreign ministers and consultations with the Ministry of Foreign Affairs and strategic dialogue at ministerial level form the general framework for bilateral consultations covering all areas of common interest. The 6th joint meeting of the Commission was held in Hanoi in August 2018. The 10th consultations of the Ministry of Foreign Affairs and the 7th Strategic Dialogue took place in New Delhi in April 2018.
On 25 August 2020, in the face of travel restrictions related to coVID 19, the last (17th) online meeting of the Commission took place between the Indian Foreign Minister and the Minister of Foreign Affairs/Deputy Prime Minister of Vietnam. The enormous volatility in the global trading environment has led companies to diversify their supply chains away from China, which has increased the importance of the India-Vietnam trade route for international business. Given Vietnam`s strong economic growth in recent years, it is necessary to review the India-ASEAN free trade agreement to promote continued trade in promising emerging sectors between the two countries. As the standard Charter report points out, there is significant room for greater trade between India and Vietnam if both governments take a proactive approach to trade and investment and exploit that potential. India has a long-standing development partnership with Vietnam, which has made a positive contribution to Vietnam`s capacity building and socio-economic development. India has also provided assistance to Vietnam in the framework of ASEAN countries. As part of the Mekong ganga cooperation (MGC), India has registered rapid impact projects (QIPs) worth $50,000 each in different provinces of Vietnam for the development of municipal infrastructure in S.a. With their short gestation period, IQPs bring direct benefits to grassroots communities. To date, 13 ICP have been completed in 12 provinces of Vietnam since 2017, while in 2020-21, 13 new projects will be implemented.